They designed and built a prototype card machine that plugged into an iPhone using the old 30-pin dock connector that Apple used on the iPhone 3 and iPhone 4.
Initially, the prototype could only read a card number. However, that was enough for them to raise initial seed capital.
“Ramsey and I often would joke… when we went to my old man to say, ‘Can we build this card machine?’ and he said it would be a piece of cake. It was anything but a piece of cake.”
Putman said the card machine they designed went on to become the first such South African-developed device to be fully certified by International Card Schemes and PCI.
This was quite a remarkable achievement, considering they had only brought in two additional engineers, one of which was fresh out of university, to help his father.
However, there was little time to celebrate as the small iKhokha team were immediately thrown curve balls, the first being Apple switching to the Lightning connector in 2014.
As Android began to scale aggressively in South Africa, iKhokha adapted its hardware to plug into a headphone jack, which required digital-to-analogue (and analogue-to-digital) conversion.
Android’s open ecosystem added an additional challenge because every audio driver for the headphone jack was different across various manufacturers, making a universal device difficult to develop.
Putman said that any hardware design changes required going back to international labs for expensive and time-consuming recertification, adding immense complexity.
The controlled environment of certification labs also differed from real-life conditions, where factors like static, cold, heat, and physical handling could affect the hardware’s behaviour.
To overcome these hurdles and focus on its core competencies, they decided to scrap building their own hardware and instead partner with a third-party provider from Eastern Europe.
Putman explained that the hardware had become increasingly commoditised, with manufacturers in China building Bluetooth card machines.
This let them double down on distribution, customer journey innovation, and developing their software stack, eventually leading to good traction and improved customer retention.
“That took many years, and it was very painful. There were times where we literally had funding on a month-to-month basis and, depending how we did in a month, we would find out if we were able to make payroll,” said Putman.
He said that although it was very stressful, it was also “quite a romantic time” because they were a very small team of people all focused on trying to ensure the business survived.
“We all worked really hard to do that together and, against all odds, I guess, managed to get product-market fit right.”